basic accounting summer 2014 - 69418

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Summer 2014 – Examination # 1

USE SEPARATE SHEETS OF PAPER

20 POINTS

1) The Jack Corporation had the following adjusted trial balance as of their year-end December 31, 2013. The company began operations on March 1, 2013. No dividends were declared or paid during the year.   Based on the information below, prepare a completed Income Statement, Balance Sheet and Statement of Retained Earnings for the year ending December 31, 2013.  

 

                                                                DR                                          CR

Cash                                                $16,500

Accounts Receivable               $7,550

Inventory                                      $32,500

Equipment                                    $60,500

Accounts Payable                                                                    $25,000

Salaries Payable                                                                                        $8,000

Unearned Revenue                                                                $2,000

Common Stock                                                                          $60,000

Retained Earnings                                                                       ????

Sales Revenue                                                                          $125,000

Salary Expense                           $60,000

Rent Expense                             $33,500

Maintenance Expense              $9,450

 

 

 

 

 

 

 

 

 

20 POINTS

 

2) Below is a balance sheet that contains many errors and misclassifications. The accountant who prepared this statement was not very knowledgeable in basic accounting fundamentals. Many errors were made in the format prepared below. Using your Financial Accounting knowledge prepare a corrected balance sheet in the proper format.  (Hint, Total Assets should be $137,000, net income for the year is $32,250)

 

JJP Inc.

Balance Sheet

Year Ending December 31, 2013

 

 

Assets

Cash                                                                      $35,000

Inventory                                                            $39,000

Equipment                                                          $38,000

Retained Earnings                                            $32,250   

                TOTAL                                                   $144,250

Liabilities

Amounts Owed to Suppliers                      $15,000

Amounts Owed to Employees                   $2,750

Note Owed to Bank                                        $25,000

Amounts Due from Customers                  $10,000

Supplies on Hand                                             $15,000

Common Stock                                                 $62,000

                TOTAL                                                   $129,750

 

 

 

 

 

 

20 POINTS

 

3)  The Carrigan Company is a relatively small manufacturer that produces yard maintenance equipment. They have been in business for four years. At December 31, 2012 (their fiscal year end), the adjusted trial balance reported total assets of $585,000 (Cash, $110,000; Equipment, $275,000; Buildings $200,000), total liabilities of $275,000 (Accounts Payable, $125,000; Note Payable, $150,000) and total stockholder equity of $310,000 (Common Stock, $50,000, and Retained Earnings, $260,000). During 2014 the following transactions took place:

a) Borrowed and received $50,000 cash from a local bank by signing a 10 year note

b) Purchased Equipment for $45,000, paying $15,000 cash and owing the remainder within 60 days

c) Purchased a new truck for $30,000, paying all in cash

d) Loaned $25,000 cash to John Carrigan, the company president

e) Constructed a new wing onto their existing building. The cost of the addition was $30,000 which added to the overall cost of the building. Entire amount was paid in cash.

f) Purchased $60,000 in long term investments, using cash to do so

g) Return one of the pieces of equipment purchased in transaction B. The cost of the returned equipment was $5,000. A cash refund was issued to the Giuliano Co.

h) A stockholder sold $10,000 of his capital stock to his best friend

i) Declared and paid $40,000 in dividends during the year

 

REQUIRED:

 

Create T Accounts for each of the accounts listed in the introduction. Report the beginning balance of each account at 1/1/2013 and post each transaction (A to J) to the respective T accounts, creating new T accounts if needed. Show each transaction in the T account and the ending balance of each account at the end of the fiscal year (December 31, 2013). Please denote each transaction made in the respective T account with a reference to the transaction letter (A-J) and circle the ending balance of each account.

 

 

15 POINTS

 

4) Hammond Company was started in 2013 by 5 initial investors. Each investor contributed $10,000 cash into the business. In addition, a parcel of land was given to the company which had an assessed value of $200,000. Also given was equipment costing $103,000, supplies of $17,000 and a delivery vehicle with a fair market value of $30,000. In exchange for these assets, the stockholder’s received $400,000 in the company’s common stock.

As the company’s new accountant prepare the journal entry necessary to record this initial transaction. Remember to include an explanation as to the purpose of the journal entry made

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 POINTS

 

5) The Fiscal Year of the Boston Bruins from July 1 to June 30 of each year. During the summer months the team collects season ticket revenue in advance of the new regular season which begins October 1st  and continues through April.  The team will play 48 home games during 2014-2015. In July and August, the team collected $42,000,000 in season tickets for the upcoming season.

 

A) Prepare the journal entry to record the transaction above

 

 

 

B) How much unearned revenue will be remaining at the end of January 2015 assuming they play 6 home games each month from October to April (7 months)?

 

 

 

 

 

 

 

 

 

 

 

 

10 POINTS

 

6) Below is a listed of the current chart of accounts in Alexander’s Corp.  general ledger. Below that is a list of transactions that took place during the month. In the debit or credit columns place which account you would report in the appropriate journal entry (ie: if an increase in Cash took place, put an “A” in the debit column and put the corresponding credit(s) account referenced letter in that column):

A) CASH

B) ACCOUNTS RECEIVABLE

C) EQUIPMENT

D) ACCOUNTS PAYABLE

E) SUPPLIES

F) MORTGAGE PAYABLE

G) COMMON STOCK

H) RETAINED EARNING

I) SALES REVENUE

J) UTILITIES EXPENSE

K) DIVIDENDS

 

 

                                                                                                                                DEBIT                                    CREDIT

1)  Made sales to customers on account 

 

2)  Purchased Equipment, paying a portion in

      Cash and took out a mortgage for the remainder

 

3)  Purchased supplies on credit to be paid within

      30 days

 

4) Paid Dividends of $5,000 to stockholder’s

 

 

5) Paid utilities for the current period

 

     In Cash

Solution Description

Summer 2014 – Examination # 1

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